Australia-listed casino operator Donaco International Ltd says it is aiming to keep its cash burn rate at between US$800,000 and US$900,000 a month, amid a slump in business related with Covid-19.
The firm posted a revenue decline of more than 95 percent for the three months ended June 30, it said in a filing on Friday.
Meanwhile, Paul Arbuckle is to step down as company chief executive on Tuesday (August 4), according to the same filing. Donaco had said in early June that outgoing CEO Mr Arbuckle would remain in post on a “month-to-month” basis beyond his originally planned June departure, in order to help the firm make a “smooth transition” to a new CEO.
“The CEO recruitment process is ongoing,” the firm said in its latest filing. “The board has interviewed a number of quality candidates,” and the people were “currently under consideration,” it added.
Donaco said it recorded quarterly revenue of AUD0.9 million (US$642,000) in the three months ended June 30, compared to AUD20.3 million in the prior-year period. Group earnings before interest, taxation, depreciation and amortisation (EBITDA) were negative by AUD3.0 million compared to being positive by AUD4.8 million a year earlier.
“The June quarter was significantly impacted by the onset of Covid-19 and the resultant restrictions on casino operations and border closures,” the firm said.
Donaco runs casino hotel properties in Indochina: Star Vegas Resort and Club (pictured in file photo) at Poipet on Cambodia’s border with Thailand; and Aristo International Hotel and its associated casino at Lao Cai on Vietnam’s border with China.
The firm said in its filing that Star Vegas had been closed since April 1 following an order from the Cambodian authorities. Aristo was also closed on April 1 but was allowed to reopen in May, Donaco added.
“Despite Aristo having officially reopened, the casino has been operating on a limited basis, as the border with China, where most of Aristo’s patrons originate from remains closed,” said the firm.
It added: “The closure of both DNA Star Vegas and Aristo International Hotel for an extended period of time has had a material impact on Donaco’s operations.”
The boutique casino operator said it was placing “heavy emphasis on tightly controlling and reducing costs and capital expenses” to cope with the current business downturn. Donaco added it had set a monthly target cash burn rate from maintaining its casino assets and associated corporate costs of “approximately US$800,000 to US$900,000.”
The firm noted that, as of June 30, it had cash and cash equivalents amounting to AUD12.8 million.
Donaco said that, “in response to the activity slowdown” at Aristo, management had implemented a number of cost-saving measures including “a reduction in total staff headcount and deferring various capital expenditure projects”.
Donaco stated that, despite the challenges posed by Covid-19, a “number of positive events” related to the company’s management had occurred in the three months to June 30, including a settlement reached with the Thai vendors that had sold Star Vegas to the company. Those people had now increased their stake in Donaco.
The boutique casino operator also mentioned the “support received from principal lender Mega Bank with the deferral of certain repayments and waiver on covenants until the end of the calendar year”. Donaco had previously disclosed that Mega International Commercial Bank Co Ltd, also known as Mega Bank, had agreed to defer from June 2020 to December 2020 certain repayments under a debt facility.
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